The new Darwin Centre at the Natural History Museum, London. Photograph: Linda Nylind for the Guardian

Humans share the planet with as many as 8.7 million different forms of life, according to what is being billed as the most accurate estimate yet of life on Earth.

Researchers who have analysed the hierarchical categorisation of life on Earth to estimate how many undiscovered species exist say the diversity of life is not equally divided between land and ocean. Three-quarters of the 8.7m species – the majority of which are insects – are on land; only one-quarter, 2.2m, are in the deep, even though 70% of the Earth's surface is water.

The study, which is published in the journal PLoS Biology, underlines just how little humans know about what is out there – and which plants and animals will become extinct before scientists can even record their existence.

"Scientists have been working on this question of how many species for so many years," said Dr Camilo Mora of the University of Hawaii and Dalhousie University in Halifax, Nova Scotia.

The quest was growing increasingly urgent. "We know we are losing species because of human activity, but we can't really appreciate the magnitude of species lost until we know what species are there," he said.

An astonishing 86% of all plants and animals on land and 91% of those in the seas have yet to be named and catalogued, the study said.

The authors drew on the taxonomy, or categorisation system, devised by Carl Linnaeus about 250 years ago to arrive at their estimate of 8.7m – give or take 1.3m.

The Swedish biologist devised a hierarchical, tree-like structure where each individual species was classed in a series of progressively larger groups, culminating at the kingdom level. Thus a single species of hermit crab is classified in the decapod order, which belongs to the sub-phylum of crustaceans, the phylum of arthropods, and finally the animal kingdom.

The authors, in their analysis of existing data on 1.2m species, detected patterns between those hierarchical groupings which they could use to infer the existence of missing species that scientists have not yet described. That allowed them to use data from higher orders – such as anthropods, where there is a lot of data – to predict the number of creatures at the species level. Their estimate that the various forms of life on the planet included 7.8m species of animal, 298,000 species of plant and 611,000 species of mushrooms, mould and other fungi along with 36,400 species of protozoa, single-celled organisms, and 27,500 species of algae or chromists. The researchers did not venture to put an estimate on the number of bacteria.

Scientists have been trying to count and catalogue the living world for 250 years, since around the time when the Linnaeus devised his method of cataloging and naming living things. Current estimates range from 3m to 100m.

"It's not that we just don't know the names in the phone book. We don't know how big the phone book is," said Derek Tittensor, a co-author who works for the UN Environment Programme.

Robert May, a former UK government science adviser, acknowledged that this effort, like all those of its predecessors, was based on imperfect knowledge. But he said the study's conclusions were reasonable.

"It is sort of saying that the trunks and lower branches of the tree seem similar from group to group. At one end of the thing, you have birds and mammals that really are completely known. At the other end, you have just got a handful of branches and twigs. But if you do the big assumption the trees are similar, then it seems sensible."

"What I almost guarantee will happen next is that someone will write a response saying that if you just change the parameters in such and such a way you will get fewer species, or you will get more species," he said.

"The truth is we are still so ignorant … There is still not a plot of tropical forest anywhere in the world that has been inventoried completely – not even a hectare."

Linnaeus, in his day, was confident he had captured the entire world of living things: he named about 10,000 species, most of which were confined to Europe.

More modern attempts to classify the living world have sought patterns from the size of living creatures, or their location. Were there more species in hot, tropical zones or in cooler areas? And what about the ocean depths? Others focused on the relationship between species.

In 1979, Terry Erwin, a carabidologist – beetle expert – at the Smithsonian Institution in Washington, went out into the jungles of Panama, rolled some sheeting on the ground and sprayed several trees with pesticide.

He discovered the bodies of more than 1,100 new species of beetle from the canopy of a single type of tree.

There could be as many as 30m species of insects in tropical rainforests alone, calculated Erwin. The finding drew controversy, but Erwin defended his method against those in the latest study. "Virtually all of them are really measuring human activity," he said. "These guys base these on classification of animals, and classification of animals are human constructs. The reason it is predictable is that humans are predictable, especially in the scientific field. What they are measuring really is human activity. It is not real activity out in the wild."

He went on: "I was the first to use real critters, not some kind of limp arithmetic. I had to make some assumptions and came out with 30m. What it started was a kind of cottage industry of estimating everything on the planet."

However, Nigel Stork, a professor of environmental science at Griffith University, south-east Queensland, believes the current study appears to be closer towards an accurate count. "I think it's a landmark paper," he said, adding that advances in electronic lists of species gave the authors a fuller set of data to work from. "Too often in the past, they used limited data and extrapolated way beyond the realm of what you could extrapolate."

The authors note that identifying and describing new life forms is expensive and slow, especially when set against the magnitude of species yet to be found or catalogued.

Barely 14% of creatures on Earth have been logged in central databases – just 9% of those in the seas, the study noted. And, according to David Kavanaugh, a beetle expert at the California Academy of Science, funding and other resources fall short of the task as research institutions are cutting back, and governments are more preoccupied with finding life on Mars than on Earth.

"The most frustrating this is to realise how little resources go into answering this question," he said. "One of those flights to Mars would fund us for decades in exploring life on this planet," he said. "It is very hard to get any money at all to go out, and yet they can go and blow up a rocket on a launch pad that would have funded my career and that of 100 others."

Most of those species waiting to be discovered will be small, and they are likely to be concentrated in remote areas or the depths of the ocean. But the authors said: "Many could be found literally in our own backyards."

But at the current pace, it would take 300,000 specialists 1,200 years to go through the laborious process of describing the new discoveries in scientific journals, and then entering them in electronic databases. "Describing species is a very time consuming process," said Tittensor. "Although it will be relatively straightforward to find a new species – there are millions of them out there – it is not necessarily an easy process to describe them in scientific literature."

Many of those species will be extinct before scientists have even registered their presence.

Discovering new species

Scientists and conservationists are regularly updating the inventory of life with the discovery of new species. Last week, scientists at the Smithsonian Institution reported the discovery of a primitive eel in a reef off the coast of the South Pacific island nation of Palau. The new species, Protoanguilla palau, bore little relation to 19 other forms of eel currently in existence and some of its characteristics – such as a second upper jaw – were more in line with fossils from 65m years ago.

Other recent highlights, as compiled by the International Institute for Species Exploration (IISE) at Arizona State University, include the eternal light mushroom, or Mycena luxaeterna, which emits bright yellowish light. The new species was collected from forests near Sao Paulo, Brazil. Another highlight was the golden spotted monitor lizard (Varanus bitatawa), a two-metre long beast discovered on Luzon Island in the Philippines. It has evaded earlier discovery by spending most of its time in the trees.

But most scientists expect the next rush of discovery to come from even smaller organisms, such as bacteria. The IISE also highlighted the discovery of a new bacteria growing on the shipwrecked hull of the Titanic. Halomonas titanicae is an iron oxide-eating bacteria, that could eventually eat the wreck up.